Apple: U.S. e-book lawsuit "fundamentally flawed"

Wed May 23, 2012 4:23pm EDT

A woman holds up an iPad with the iTunes U app after a news conference introducing a digital textbook service in New York in this January 19, 2012, file photo. REUTERS/Shannon Stapleton

A woman holds up an iPad with the iTunes U app after a news conference introducing a digital textbook service in New York in this January 19, 2012, file photo.

Credit: Reuters/Shannon Stapleton

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(Reuters) - Apple Inc is rejecting charges that it conspired to fix prices of electronic books, calling the U.S. government's antitrust lawsuit a "fundamentally flawed" endeavor that could discourage competition and harm consumers.

In a filing in U.S. District Court in Manhattan late Tuesday, Apple said it has not conspired with anyone or fixed prices for e-books in an effort to thwart Amazon.com Inc's dominance of that fast-growing market.

The Justice Department accused Apple in April of colluding with five publishers to boost e-book prices in early 2010, as the Silicon Valley giant was launching its popular iPad tablet.

Amazon, which makes the Kindle e-reader, had long sold e-books for as little as $9.99. The government complaint quoted Apple's late co-founder Steve Jobs as wanting to offer publishers a means to boost prices, and "create a real mainstream e-books market at $12.99 and $14.99."

But Apple argued that its foray into e-books has actually fueled demand for e-books by forcing Amazon and rivals, including Barnes & Noble Inc, to compete more aggressively, including by upgrading e-reader technology.

"Apple's entry into e-book distribution is classic procompetitive conduct" that created competition where none existed, Apple said in its court papers.

"For Apple to be subject to hindsight legal attack for a business strategy well-recognized as perfectly proper sends the wrong message to the market," it added. "The government's complaint against Apple is fundamentally flawed as a matter of fact and law."

Apple also denied that the government "accurately characterized" the comment attributed to Jobs.

A Justice Department spokeswoman referred a request for comment to the announcement of the April 11 lawsuit, when Attorney General Eric Holder said the alleged collusion cost consumers millions of dollars on the most popular e-book titles.

The publishers Macmillan and Penguin Group, which are respectively units of Verlagsgruppe Georg von Holtzbrinck GmbH and Pearson Plc, are fighting the antitrust case.

News Corp's HarperCollins Publishers, CBS Corp's Simon & Schuster and Lagardere SCA's Hachette Book Group settled the case.

The case is U.S. v. Apple Inc et al, U.S. District Court, Southern District of New York, No. 12-02826.

(Reporting By Jonathan Stempel in New York; Editing by Martha Graybow, Bernard Orr)

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